HR Transformation in India

A case for Business Driven HR

Summary Report
September 2012
www.deloitte.com/in
2
Key Findings
HRT is Top of the Mind Overwhelming 83 percent
organizations across industry verticals have indicated
that they have initiated a HR Transformation initiative
in the last 5 years [Figure 1]. Interestingly, 65 percent
of these companies suggested that these initiatives are
being driven by the corporate or global leadership.
HRT Focusing on Value Creation Effectiveness of
HR services and HR Capability drive the case for HRT.
86 percent cite service effectiveness and 81 percent
cite building HR capability as a transformation driver
as compared to Efciency - HR Cost - the traditional
hallmark of the HR function [Figure 2]. This clearly
shows a shift in focus of organizations from cost savings
(in an area that accounts for less than 1 percent of
corporate revenue), towards determining how HR can
help support and align with business strategy.
Empowered CHROs CHROs are the key decision
makers and sponsors for these initiatives (60 percent)
[Figure 3]. This indicates that CEOs are empowering
CHROs to bring HR into the 21st century and take
responsibility for business HR alignment. At the
same time over 58 percent of the respondents
conduct HRT as part of larger corporate efforts rather
than stand-alone initiatives
Human Resource Transformation (HRT) focuses on maximizing the
effciency and effectiveness of HR service delivery models and HR functions
through reengineering processes, restructuring, implementing new systems
or a new HR service delivery model, outsourcing or insourcing with the
specifc intent of enhancing HRs contribution to the business strategy. Global
trends suggest that with the impending challenges and issues that
organizations are facing with HR Service Delivery, there is a need to redefne
how HR operates and delivers its services to the employees. In the Indian
scenario, HR Transformation is the current buzz word being used by HR and
business leadership striving to improve HR services and keep pace with the
developments in more mature markets. Keeping this in mind, Deloitte
Touch Tohmatsu India Pvt. Ltd (Deloitte India) has conducted a dip stick
survey to understand how companies are bringing HR into the 21st century
and to understand how HR functions and leaders are approaching
transformation in Indian context.
2%
3%
14%
81%
Transformation Complete
Have Not Begun
No Plans
Still Transforming
Figure 1: HR Transformation is Top of the mind
Figure 2: Factors that drive HR Transformation
Figure 11: What are the key drivers for HRT?
41%
54%
65%
81%
86%
Compliance
Free HR for Strategic Work
Efciency HR cost
Build HR Capability
Effectiveness - Service
HR Transformation in India - A case for Business Driven HR 3
Business events trigger HRT Survey results indicate
that most transformation efforts are more likely to
be launched in response to specic business events,
rather than as part of a strategic plan. Two business
events trigger more than 60 percent of the initiatives to
transform HR [Figure 4]. A signicant number of Indian
organizations (14 percent) also indicated Rapid Growth
as an impetus to initiate HRT interventions.
Focus of HR Improvements With a view to increase
service efciency, organizations are focusing increasingly
on standardizing their HR processes (89 percent) and
implementing IT platforms (81 percent) to enhance
employees experience [Figure 5]. As in the past, in
Deloittes experience most HR improvement programs
still center on tactical initiatives, rather than providing
solutions for strategic business issues.
Process standardization is the key scope for HR
Transformation and for the organizations which chose
Standardize HR as their scope of HRT, Manage
Compensation (75percent), Manage Talent Acquisition
(75 percent) and Manage Performance (72 percent)
emerge as the top three processes.
Transformation and Shared Services HR shared
services is a global trend which is gaining acceptance
in India as an enabler to move transactional and
administrative activities to a separate setup. This is
marked by the fact that 45 percent organizations in
the survey have stated that their HR service delivery is
managed by a shared services center.
Out of the 43 percent of the respondents who indicated
that restructuring the HR organization was part of the
scope of activities for HRT interventions [Figure 5], the
majority of respondents (57 percent) indicated that
restructuring HR shared services was one of their main
areas of work [Figure 6].
Transformation and Outsourcing Human Resources
Business Process Outsourcing (HR BPO) offers
organizations multitude opportunities. However, HR
BPO is a complex business arrangement, and it is not
the solution for every HR business objective. As per the
Deloitte India survey, 54 percent of the respondents
have selectively or completely outsourced their HR
processes. The primary considerations for organizations
to outsource are: reducing operating costs, cost
avoidance, improving customer service, and refocusing
HR on more value-added activities directly supporting
business strategy.
A vast majority of respondents are outsourcing various
HR administrative/operational processes whereas
outsourcing of strategic HR activities is riskier and
less common which is visible from the survey ndings
[Figure 7]. However, 41 percent of the organizations
who decided to outsource their processes to an external
partner did not transform their HR function before
outsourcing the processes. This is one of the main
Figure 3: The Key Sponsors of HR Transformation
Figure 4: Events that trigger HRT
Figure 8: Who is the key Sponsor for HRT?
Figure 7: At what level is HRT being driven?
Figure 6: How long have you been transforming HR?
Figure 5: Where are you on the HRT journey?
8%
27%
65%
Business Unit / Subsidiaries
Regional/Country
Corporate/Global
5%
11%
24%
60%
COO
Other
CEO
CHRO
Have Not
Begun
3%
Still
Transforming
81%
Transformation
Complete
2%
No Plans
14%
5%
41%
32%
22%
0 - 1
1 - 2
2 - 3
3 - 5
Figure 10: Stand Alone efforts/part of Larger Corporate effort
Figure 9. What are the events triggering HRT?
8%
33%
58%
Dont know
Stand Alone Effort
Part of Larger Corporate Effort
11%
14%
24%
24%
43%
M&A
Rapid Growth
Others
New Executive
Corporate Restructuring
Figure 5: The Key activities that form a part of HR Transformation initiatives
Figure 6: HR Roles that are part of restructured HR organization
Figure 13: What is the scope (key activities) of the HR Transformation initiatives?
30%
41%
43%
78%
86%
Upgrade HR Staff
Change Organization culture
Restructure HR Organization
Implement IT Platform
Standardize HR
Figure 21: HR Roles that are part of restructured HR organization
14%
32%
43%
57%
HR IT part of HR
Shared Services
HR Centers of
Excellence
HRBP Generalists
HR Shared Services
/ HR Ops
4
Figure 27. What processes are in scope for the outsourcing initiative?
89%
89%
89%
89%
86%
84%
84%
81%
81%
78%
78%
70%
59%
59%
16%
11%
11%
11%
11%
14%
16%
16%
19%
19%
22%
22%
30%
41%
41%
84%
Manage Employee Relations
Manage Career and Succession Planning
Manage Competency
Manage Talent Planning
Manage Performance
Manage Employee Engagement
Manage Employee Separation
Manage Induction & OnBoarding
Manage Employee Health & Safety
Manage Compensation
Manage HR Records
Manage Benets
Manage Talent Acquisition
Manage Training & Development
Manage Payroll
Internal Outsourced
reasons why most of the outsourcing initiatives do not
reach the effectiveness and efciency levels as broken
processes are shifted As Is into the outsourced units.
Most of the organizations end up outsourcing their pain
areas without nding solutions for the same.
What the future may hold A small but growing
number of respondents identied the key business issues
that they need to support in order to support business
strategy. We see this as an indication that business-HR
alignment is an emerging and important business issue
and that Business Driven HR may be the wave of the
future. In most cases, that will mean focusing on three
key areas: operational excellence, revenue growth, and
talent strategies. HR transformation in the future will
focus on aligning HRs services and capabilities with the
strategic needs of the business to create business value.
Figure 7: Processes in scope for outsourcing
Figure 8: Emerging business issues driving future HR transformation
12%
12%
19%
24%
26%
38%
43%
71%
Mergers & Acquisitions
Ageing Workforce
Product Innovation
Improving or Starting
Service Business
Global Mobility
Building & managing global
workforce
Entering New Markets
Training next generation
leaders
Figure 32. Emerging business issues driving future HR transformation
HR Transformation in India - A case for Business Driven HR 5
Moving Forward In our experience, HR
transformation is gaining momentum slowly in India,
while market forces are moving much more quickly.
A more complete perspective of transformation is
necessary for HR to assume the role forward-looking
C-suite executives want HR to play and act as a strategic
business partner within the company.
Here are some actions for HR leaders to move forward:
Accelerate the transformation of core services
Balance HRs portfolio to address strategic people
issues
Align HRs portfolio with organizations strategic
objectives
Methodology and Demographics
Deloitte India conducted a pan India survey companies
operating out of India and received participation
from 42 top companies. The objective of the research
was to understand how HR functions and leaders are
approaching transformation. The following industries
were represented in the survey results.
Figure 9: Industry wise break up of respondents
Figure 10: Industry wise break up of respondents
Accelerate
Align
Balance
14%
5%
5%
9%
12%
17%
17%
19%
Other
Financial Services
Energy & Resources
Infrastructure
Consumer Business & Retail
Life Sciences and Health Care
Information Technology
Manufacturing
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Authors
Thought Leadership
Mr. P Thiruvengadam
Senior Director, Bengaluru
Email: pthiruvengadam@deloitte.com
Dr. Vishalli Dongrie
Senior Director, Mumbai
Email: vdongrie@deloitte.com
Ms. Sucheta Hota
Director, New Delhi
Email: suhota@deloitte.com
Mr. Shivram Sethuraman
Director, Chennai
Email:shsethuraman@deloitte.com
Authors
Mr. Saurabh Dwivedi
Manager
Email: sdwivedi@deloitte.com
Ms. Anshul Jain
Senior Consultant
Email: ansjain@deloitte.com
Mr. Prateek Roy
Consultant
Email: proy@deloitte.com
Key Contributors
Ms. Guneet Jolly
Senior Consultant
Email: gujolly@deloitte.com
Ms. Pallavi Tandon
Senior Consultant
Email: paltandon@deloitte.com
Ms. Ramya Madhavan
Senior Consultant
Email: mramya@deloitte.com
Mr. Amit Kumar
Consultant
Email: amitnkumar@deloitte.com
HR Transformation in India - A case for Business Driven HR 7
Global Human Capital
Leadership
Global
Global Human Capital
Leader
Brett Walsh
+44 20 7007 2985
bcwalsh@deloitte.co.uk
Global Marketing,
Eminence & Brand Leader
Jeff Schwartz
+1 202 257 5869
jeffschwartz@deloitte.com
Strategic Change
& Organization
Transformation
Leader
Simon Holland
+44 20 7007 1922
siholland@deloitte.co.uk
HR Transformation Leader
Jason Geller
+1 212 618 4291
jgeller@deloitte.com
Talent, Performance &
Rewards Leader
Lisa Barry
+61 3 9671 7248
lisabarry@deloitte.com.au
Actuarial & Advanced
Analytics Leader
Dave Foley
+1 212 618 4138
dfoley@deloitte.com
Americas
Americas HC Leader
Jaime Valenzuela
+56 27298016
jvalenzuela@deloitte.com
United States Leader
Barbara Adachi
+1 415 783 4229
badachi@deloitte.com
Canada Leader
Heather Stockton
+1 416 601 6483
hstockton@deloitte.ca
Brazil Leader
Henri Vahdat
+55 11 5186 1747
hvahdat@deloitte.com
LATCO Leader
Veronica Melian
+598 2916 0756 ext. 6134
vmelian@deloitte.com
Mexico Leader
Jorge Castilla
+52 55 50806110
jocastilla@deloittemx.com
Asia Pacic
Asia Pacic HC Leader
Richard Kleinert
+2035632523
rakleinert@deloitte.co.nz
Australia Leader
Nicky Wakeeld
+61 2 9322 5799
NWakeeld@deloitte.com.au
Japan Leader
Kenji Hamada
+80 4358 7073
kehamada@tohmatsu.co.jp
China Leader
Jungle Wong
+86 10 85207807
junglewong@deloitte.com.cn
India Leader
P. Thiruvengadam
+91 80 6627 6108
pthiruvengadam@deloitte.com
Korea Leader
Seok Hoon Yang
+82 2 6676 3644
seoyang@deloitte.com
South East Asia Leader
Hugo Walkinshaw
+65 9836 8991
hwalkinshaw@deloitte.com
EMEA HC Leader
Brett Walsh
+44 20 7007 2985
bcwalsh@deloitte.co.uk
United Kingdom Leader
David Parry
+44 20 7007 2988
davidparry@deloitte.co.uk
South Africa Leader
Trevor Page
+27115174263
trepage@deloitte.co.za
Austria Leader
Christian Havranek
+43 1537002600
CHavranek@deloitte.at
Belgium Leader
Yves Van Durme
+32 2 749 59 97
yvandurme@deloitte.com
Central Europe Leader
Evzen Kordenko
+420 246 042 883
ekordenko@deloittece.com
Denmark Leader
Kim Domdal
+45 30 93 63 51
kdomdal@deloitte.dk
France Leader
David Yana
+33 1 58 37 96 04
dyana@deloitte.fr
Germany Leader
Udo Bohdal
+49 69 97137350
ubohdal@deloitte.de
Luxembourg Leader
Gilbert Renel
+352 45145 2544
grenel@deloitte.lu
Middle East Leader
Ghassan Turqieh
+961 1 366844
gturqieh@deloitte.com
Netherlands Leader
Ardie Van Berkel
+31 882881834
AvanBerkel@deloitte.nl
Spain Leader
Enrique de la Villa
+34 607989675 ext. 72328
edelavilla@deloitte.es
Europe, Middle East & Africa
8
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